Beaming red in the autumn sunlight, Switch’s Citadel Campus stands out among the many behemoth warehouses at the Tahoe-Reno Industrial Center located off Interstate 80 in Storey County.
Paired with its imposing Core Campus on South Decatur Boulevard in Las Vegas, Switch’s presence at both ends of the state is hard to miss. It’s not just the buildings’ size. The barbed-wire fencing, imposing concrete structure, and distinct lack of windows give them a more formidable, futuristic, and almost Orwellian look.
Many of the other structures exist as staging areas to transport an endless supply of goods by 18-wheeler over the asphalt internet. Switch and centers like it provide data infrastructure that speeds information around the world and straight into the future.
Big data means big business in Nevada. In August, Google announced it plans to invest more than $400 million in the state in the coming months to support its own data center campuses in Clark and Storey counties.
Switch has come a long way since its founding in 2000 by data maven Rob Roy. The company was acquired in December 2022 for $11 billion by DigitalBridge and IFM Investors. A global digital investment firm managing about $80 billion in assets, DigitalBridge’s origins date to the 1991 rise of Tom Barrack’s Colony Capital real estate and investment management firm. Under the leadership of CEO Marc Ganzi, DigitalBridge has come a long way, too.
These days, the company is garnering its share of headlines in other states as it expands its footprint in Michigan, Texas, Georgia, and beyond. And with its September announcement that it had secured $5 billion in new debt financing, its future would appear bright.
Beyond an exclusive 2018 interview with Roy by The Indy’s Riley Snyder, most of Switch’s press in Nevada can politely be called enthusiastic, even breathless. The mercurial Roy hasn’t done a lot of talking, but Switch’s generosity with Nevada’s political class speaks a language of its own. In the Silver State, it’s hard to doubt that Switch has clout.
Press scrutiny outside business-friendly Nevada is familiar to those who follow the gargantuan growth of the nation’s data centers in the age of AI: energy consumption, water usage, realistic job creation, and whether the handsome tax set asides it is securing from government are a good deal for taxpayers. In Michigan, its tax breaks are hard to beat with its clients freed from paying business property taxes and sales and use taxes on data center equipment.
With all that going for it, I’m beginning to wonder whether Switch’s legal battle in Storey County against Tract Capital Management, NVLCO LLC and its affiliated entities will have the desired outcome. Tract purchased property inside and outside the Tahoe-Reno industrial site in August 2023. In October, Switch filed a lawsuit in an attempt to enforce its restrictive covenant at the industrial site that prevents a competing multiple tenant data center, known as a colocation center, from being built.
The challenge for Switch is, part of the Tract land located in the South Valley’s Peru Shelf lies outside the 107,000-acre industrial center property. On March 29, District Judge James Russell noted the geographical distinction in denying part of Switch’s motion for a preliminary injunction in the matter. Tract/NVLCO has represented to its investors that it has no intention of developing a competing data center site, but it does plan to make the land ‘shovel-ready’ for other companies to do so, Russell observed.
The judge called Switch’s interpretation of the colocation covenant “inconsistent with the Colocation Covenant’s plain language and contrary to Nevada law. The Nevada Supreme Court has made clear that ‘[r]estrictive covenants are strictly construed.’ … Switch cannot succeed on its claims relating to the South Valley.”
That seems pretty emphatic, but the legal battle continues apace. Now it’s getting uglier.
In a 65-page answer and counterclaim filed Oct. 29, Tract’s team of attorneys pull apart Switch’s restrictive covenant litigation, calling it malicious, but also allege “Switch and its CEO Rob Roy are notorious for harassing perceived rivals to deter any entrants who might seek to compete with them in the state of Nevada.”
Among Tract’s claims are tortious interference with prospective contractual relationships and partnerships, and civil conspiracy. Its attorneys from Nevada’s Lewis Roca Rothgerber Christie and Chicago’s Steptoe law firms also deny that Tract and its entities are data center developers.
Roy and DigitalBridge CEO Ganzi are named as defendants in the counterclaim, which includes emails Tract attorneys contend illustrate Roy “intentionally interfering with a third-party’s vendor relationships.” In one email, a member of the Switch board of directors told Roy that the company should avoid such interference as “the intentional interference with contractual relationship’s is a tort under NV law.”
While it’s hardly shocking when battling businesses stiff-arm each other in the name of competition, the filing cites unsealed discovery from previous litigation involving Switch. It alleges Roy and the company have attempted to “harass and smother other companies that they perceive to be a threat.”
A call seeking comment to Switch attorneys at the Dickinson Wright law firm was not returned. An email to Switch seeking comment was not returned.
With its past business practices now under fire, Switch’s legal battle with Tract will be one worth watching in 2025.
